An Empirical Study On The Effects To IPO Valuation Bubble And Company's Post-IPO Operating Performance

Venture Capital,as an important investor in China's stock market,has deeply involved in enterprise IPO operation.Its effect on the enterprise mainly includes the certification effect,grandstanding effect and the adverse selection effect.According to the theory of certification,venture capital has third party authentication function.It can alleviate the problem of asymmetric information in the IPO process,and supervise the development of invested company,which is conducive to the suppression of the stock market bubble.According to the theory of grandstanding,VC is eager to prove its ability to the market and establish its industry reputation by operation performance of the invested company,which is often immature and in poor quality.Thus,it makes the invested company's IPO valuation bubble more serious.Only those inferior enterprises will allow venture capital to hold their stock for achieving their financing purposes.Such companies may be forced to withdraw from the market because of their poor operating and market performance.In order to verify the different effects of venture capital to the invested company,We has selected 862 IPO companies from the year of 2009 to 2012 as samples,including venture capital backed and non-venture backed firms.We use variable-difference analysis and regression analysis method in order to find the differences between VC backed and non-VC backed company on IPO valuation bubble,as well as on operating performance of post-IPO companies.The results showed that,compared with non-VC backed company,VC backed company's IPO valuation bubble is more serious and its operating performance of post-IPO companies get worse.